Western National Insurance Company
Western National Insurance Company was at the verge of falling apart due to financial strain. Although the company had started strongly, poor leadership and market dynamics led the company down the drain. With the help of an external CEO, Stu Henderson, Western National Insurance took a new turn towards rebranding the company. The new CEO boosted the strengths of the company and improved on the weaknesses. Also, the new CEO was quick to notice opportunities and take advantage of such opportunities to rebrand Western National Insurance Company. In a tough eight-year journey, Henderson and his team restored Western National Insurance Company to its former glory days. Henderson and his team used several leadership tactics to engage the stakeholders of Western National Insurance Company.
Western National Insurance Company has vital stakeholders, without whom the company would seize to exist. The primary stakeholders of Western National Insurance Company were the employees. When Henderson was assessing the strengths of the insurance company, he noticed that the workforce was well seasoned, knowledgeable, and loyal to Western Insurance. Earlier, before Henderson became the CEO, the workforce experienced internal conflicts that went unaddressed due to poor management. Therefore, the working environment was not conducive for the employees, reducing their productivity. According to Alt et al. (2015), although employees are essential stakeholders in a company, their importance is usually overlooked. Many leaders are not aware that is the greatest asset in any organization. However, Henderson acknowledged the staff at Western National Insurance for the vital role they played. Henderson began by holding a meeting with the employees. The employees felt appreciated because previous leaders did not engage in direct communication with employees. Therefore, the employees felt motivated by the change of leadership. Also, Henderson held individual meetings with department heads to determine the core problem at Western National Insurance. With assistance from the department heads, Henderson came up with a list of strengths and weaknesses in all departments. Armed with the full understanding of how the departments at Western operated, Henderson was able to strategize on how to improve operations at the Western National Insurance Company.
A.M. Best was a crucial stakeholder to the Western National Insurance Company. The A.M. Best was a premier insurance rating agency. The grade given by the rating company often impacted on the future success of the company. In 1999, Western National Insurance Company received a downgrade from A- to B+ due to underperformance. The double downgrade indicated the Western had declined severely. Although A.M. Best rating company was not involved in managing the Western National Insurance Company, A.M. Best was an essential stakeholder due to their influence on the target market. Henderson took the broad step of meeting the officials of A.M. Best rating company. Henderson requested the A.M. Best officials not to downgrade the ratings of Western further citing the strengths of the insurance company. Furthermore, he assured the A.M. Best officials that he intended to work around the clock to boost the performance of Western National Insurance Company. By approaching the A.M. Best officials, Henderson built a rapport with the rating company which would prevent the Western National Insurance Company from getting another downgrade.
The top managers at Western National Insurance Company were also significant stakeholders. The senior managers were an essential element of the leadership at Western. Poor leadership and management had contributed significantly to the downfall of Western. The top managers were absentee leaders, and the hierarchical leadership strained the communication at the company. Therefore, for Western to overcome its hurdles, the senior managers had to execute effective management and leadership skills. Henderson introduced himself to the top managers and assured them that no immediate significant changes would occur. Henderson made it clear that he intended to move the company forward with their cooperation. Although the top managers led Western to its downfall, Henderson acknowledged their importance as stakeholders and therefore held a meeting with them.
The independent insurance agents were also essential stakeholders at the Western National Insurance company. Western only brokered insurance policy through the independent agents. Since Western began its operations, the company had only used independent agents to sell their insurance policies. When analyzing the strengths of Western National Insurance Company, Henderson realized that Western had a strong network of independent agents that was committed to helping the company succeed. Therefore, independent agents were relevant stakeholders since they were reliable and trustworthy business partners. According to Matuleviciene et al. (2015), secondary stakeholders can influence the performance of an organization. Therefore, by engaging the independent insurance agents who partnered with Western National Insurance Company, Henderson ensured that Western would continue to partner with the independent agents. Henderson sent a letter to the agents, thanking them for their services over the years. Besides, Henderson traveled and met the independent agents individually to foster healthy relationships.
The reinsurance company was also an essential stakeholder to Western National Insurance Company. Insurance companies also insure themselves to cover massive losses. If an insurance company has to cover obscenely high claims, the insurance company can use reinsurance and cover the claims without incurring huge losses. The Western National Insurance Company carried insufficient reinsurance coverage against exceptionally high storm claim events. Therefore, when a massive storm hit in 1998, Western did not have adequate insurance to cover the high claims. Thus, the reinsurance company was a crucial element in rebranding Western National Insurance Company. Based on the poor reinsurance that Western previously had, Henderson engaged and insurance broker and established a strong financial safety net for the company. Therefore, Henderson protected the company from losses due to considerable claims to prevent the company from going bankrupt.
The leadership skills portrayed by Henderson can be explained by the Transformational leadership theory. Transformational leaders interact with others and foster relationships that build trust. According to Jiang et al. (2017), transformational leaders transform their followers by communicating, inspiring, and encouraging. Henderson established trust with all stakeholders at Western National Insurance Company by engaging directly and individually. The previous leaders at Western utilized hierarchical leadership, where managers followed all directives from the CEO without engaging junior staff. However, Henderson fostered a strong relationship with employees by creating a communication channel. Furthermore, Henderson held individual meetings to foster trust. Also, Henderson thanked the Independent agents who partnered with Western and commended their efforts. Such letters not only make the stakeholders feel appreciated but also motivated.
In conclusion, Henderson enhanced the organizational capacity at Western and in turn improved overall performance. Although Western had hit rock bottom, Henderson saw the opportunities that existed in the market and decided to transform the company. By reaching out and engaging all stakeholders at Western, Henderson managed to rebrand the company and improve overall performance.
References
Alt, E., Díez-de-Castro, E. P., & Lloréns-Montes, F. J. (2015). Linking employee stakeholders to environmental performance: The role of proactive environmental strategies and shared vision. Journal of Business Ethics, 128(1), 167-181.
Jiang, W., Zhao, X., & Ni, J. (2017). The impact of transformational leadership on employee sustainable performance: The mediating role of organizational citizenship behavior. Sustainability, 9(9), 1567.
Matuleviciene, Migle & Stravinskiene, Jurgita. (2015). The Importance of Stakeholders for Corporate Reputation. Engineering Economics. 26. 10.5755/j01.ee.26.1.6921.